Canadian inflation expectations bolster case for supersize BOC rate hike
05.07.2022, 01:05

Canadian inflation expectations bolster case for supersize BOC rate hike

Reuters highlights the latest Bank of Canada (BOC) survey to raise the possibilities of a heavy rate hike in its analytical piece published late Monday.

“Consumer inflation expectations surged in Canada, hitting fresh highs in the short-term and up "significantly" over the long-term, a Bank of Canada survey showed Monday, bolstering calls for a very rare 75-basis point rate increase,” said the update.

Key findings

Consumers' expectations for inflation have risen, alongside concerns about prices for food, gas and rent, the central bank said in its second-quarter Survey of Consumer Expectations.

Generally, people see inflation as being more pervasive now.

In a separate survey, the bank found businesses expect high inflation for longer, with firms eyeing survey-record wage increases over the next 12 months and many planning to pass rising costs onto customers.

The surveys both reinforce calls for a 75-bp rate increase at the Bank of Canada's next decision on July 13. That would be the largest hike since August 1998, when the bank lifted rates by 100 bp to defend the currency.

Also read: USD/CAD corrects to near 1.2850 on subdued DXY, oil steadies

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